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Bitcoin: Inevitable increase in average mining cost after the Halving?

Mon 15 Jan 2024 ▪ 3 min of reading ▪ by Mikaia A.
Getting informed Mining

The Bitcoin Halving, scheduled for mid-April, promises to change everything. It is expected to significantly impact the price of BTC, with many analysts associating the block reward halving with a potential bull run. However, major upheavals are also to be expected on the side of Bitcoin miners after the halving. The average cost of mining will be revised upward during this period, putting several companies at risk.

Une grande machine de minage de bitcoin entourée de nuages noires

About 38,000 dollars to mine a bitcoin

The cost of mining bitcoin has continued to evolve. For example, in July 2022, it was estimated at 13,000 dollars per BTC, representing a significant decrease compared to the 24,000 dollars of the previous month, according to JP Morgan Chase & Co.

In June 2023, Cambridge University and Macromicro reported another figure: 29,000 dollars. This average far exceeds the production cost of a BTC at the end of December 2022, which was 15,000 dollars, almost twice as much.

Inevitable increase in bitcoin mining cost after the halving?

According to CoinShares, the average production cost for cryptocurrency miners post-halving is expected to be 37,856 dollars per bitcoin.

Based on data recently shared by CoinShare, Cointelegraph clarified that:

  • production costs and cash costs, evaluated between 16,800 and 25,000 dollars in the 3rd quarter of 2023, are expected to go between 27,900 and 37,800 dollars after the bitcoin halving;
  • the average production cost for BTC miners post-halving is 37,856 dollars;
  • electricity costs per bitcoin before and after mining account for about 68% and 71% of the miners’ total cost structure;
  • etc.

The more a miner has self-mining rigs, the more significant the data center required based on a megawatt. These considerable investment expenses are financed either by cash, equity, or debt, the latter of which can harm the total production cost of miners due to higher interest charges and put them at risk in case of a drop in the bitcoin price,” CoinShare notes.

To better understand this story of bitcoin mining costs, take a look at this report compiled by Arcane Research.

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Mikaia A. avatar
Mikaia A.

La révolution blockchain et crypto est en marche ! Et le jour où les impacts se feront ressentir sur l’économie la plus vulnérable de ce Monde, contre toute espérance, je dirai que j’y étais pour quelque chose

DISCLAIMER

The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.